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ARIAD Pharmaceuticals, Inc. (NASDAQ:ARIA)

UBS Global Healthcare Conference

May 20, 2013 8:30 am ET

Executives

Harvey J. Berger - Principal Founder, Chairman of the Board, Chief Executive Officer, President and Chairman of Executive Committee

Analysts

Matthew Harrison - UBS Investment Bank, Research Division

Matthew Harrison - UBS Investment Bank, Research Division

Good morning, everybody. I'm Matthew Harrison, the biotech -- one of the biotech analysts here at UBS. Pleased to have ARIAD presenting this morning, and presenting for ARIAD is Harvey Berger, the CEO of the company.

Harvey J. Berger

Hey, good morning. Thanks very much. It's a real pleasure to lead this morning's session off and have an opportunity to update everyone on our very strong results to date this year, the rather incredible opportunities ahead with our pipeline and focus on the strong operational implementation that we have already accomplished, and I anticipate, as we move through the year.

Let me just start by indicating that I'll be making forward-looking statements this morning and that some of these statements are subject to various different risks and uncertainties, and I encourage everybody to read our SEC filings.

So 2013 started off as a very strong year. I am confident that this year, we'll continue strong, solid and with a lot of progress that will become very obvious as we move through the year. So our first quarter sales were strong at $6.4 million. We have a positive opinion in Europe and expect to have an approval and be ready to launch in Europe very soon. Our European commercial and medical affairs team is in place, highly experienced and ready to go. We've made important progress in Japan as well, as we move the development of Iclusig forward in Japan on our own with the goal of commercializing in Japan as a stand-alone company as well.

And a lot of news coming on 113, our new non-small cell lung cancer medicine, as we move to Phase II clinical trials of 113.

So let's just think for a moment at how our strategy has been put in place and how that strategy continues, starts with very strong internal discovery. All of the products that we have brought forth have been completely discovered and developed internally. They are our product of our internal drug discovery platform and our core technology that has led to multiple small-molecule new medicines. Global capabilities across the entire spectrum of required activities to be a strong global oncology business from commercial and manufacturing all the way back through all phases of clinical development. And this strategic approach defines our full global integration strategy, which has ARIAD building a sustainable business. In particular, this is the foundation for a long-term value proposition, a sustainable, fully integrated global oncology business. We know how to do each and every one of the steps of the process, and we will deliver on the potential of each of our medicines without question.

So as we look ahead through 2013, this will be a year of commercial and clinical execution, starting with the commercialization of Iclusig in the U.S. and Europe, a strong launch already in place in the U.S., and we anticipate a strong launch starting in July in Europe. We expect to be launch-ready in July -- by the first of July, and we expect to have an approval from the European Commission before then.

We are setting the stage in Japan, with clinical development moving forward into Phase II and registration in Japan, with the goal of filing for regulatory approval with the PMDA next year in Japan.

Broad development of Iclusig will carry Iclusig from CML and Philadelphia-positive ALL forward into the frontline applications for both of those indications, as well as beyond CML and Philadelphia-positive leukemias to just to AML and to some of the other areas of great importance for the future development of Iclusig.

We'll advance the EPIC trial. That's the trial of Iclusig in the newly diagnosed patient. We expect to be in a position, based on enrollment this year, to have the interim analysis of this trial, which again compares Iclusig to Gleevec by the third quarter of next year.

We'll begin a pivotal trial of 113 in ALK-positive non-small cell lung cancer in the third quarter and continue to expand our internally discovered pipeline of new cancer medicines.

So let's spend a little bit of time talking about Iclusig. This is a really important new medicine for patients with Philadelphia-positive leukemias.

The market, first, for the resistant/intolerant patients, the basis for our label in the U.S. and Europe at the moment, we anticipate in Japan as well, is -- creates a well-defined group of patients, who, as anticipated, will switch therapies. They'll switch from one tyrosine kinase inhibitor to another. And any patient switching really is the target of our focus for commercialization of Iclusig. All of those patients are included in the U.S. The overwhelming majority of those patients are included in Europe, and we'll see how Japan fits within that spectrum, as we file next year and move towards approval in Japan as well.

In the United States, a broad label was approved, which really covers all of the resistant/intolerant Philadelphia-positive leukemia patients, a very important clinical setting where patients have failed others of the second-generation tyrosine kinase inhibitors and need a better, stronger, broader activity new medicine, one that really is agnostic to the presence of individual mutations, covers the entire spectrum of mutations that exist and has broad activity, and the efficacy and safety data for Iclusig support that broad usage. Thus far, our U.S. launch has done extremely well. Our dedicated hematology account specialists have done a great job getting the word out about Iclusig, getting to the physicians that are writing prescriptions, both in the community, as well as in academic settings. With $6.4 million of net sales in the first quarter, on top of another $3.3 million in deferred revenue, which is an inventory in large part, we've set a strong foundation, both in terms of numbers of prescriptions and the dollar value of the first quarter sales.

Over 400 patients now on Iclusig through the end of April, over 300 unique physician prescribers. Importantly, 70% in the community, 30% academic physicians. That's surprising. We didn't expect to be at 70-30 in favor of the community physicians this early in the launch. But what it's telling us is that the Iclusig message of safety and efficacy is getting through to the medical community broadly, and Iclusig is being adopted across the entire spectrum of physicians taking care of patients with CML and other Philadelphia-positive leukemia.

As well, the message is coming through loud and clear about using Iclusig in all lines of resistant/intolerant patients. We've already seen about 1/4 of the prescriptions in patients who are in the second line that is having failed only one prior TKI, as well as focused on predominantly the chronic-phase patients. Those are the patients over a majority of the patients that have been treated with Iclusig have chronic-phase CML. Those are the patients that will receive therapy almost certainly for the longest period of time. We'll present data at ASCO in a couple of weeks showing the long-term duration of treatment from the original Phase I trial with patients on drug for several years, stable, long term, tolerating it well, with a strong safety and efficacy profile. That will become the increasing message for Iclusig going forward.

We've also seen very strong payor support with essentially every patient and all the prescriptions being written covered by various payor plans.

So now let's think about Iclusig in Europe. We are operational and ready to go in Europe, having put in place over the last year a strong, fundamentally broad-based commercial and medical affairs organization in Europe to cover the major markets in Europe on our own, to take on the competition and effectively commercialize Iclusig in Europe, as we have done in the U.S. With a positive CHMP opinion, we expect a broad label, including second-line use, through the European Commission approval that we anticipate very soon.

A significant market opportunity, as we spoke about a few minutes ago, with patients who'll switch tyrosine kinase inhibitors. The first -- the countries that we'll focus on first in Europe are those where we can commercialize earliest: France, Germany and the U.K. We already have a commercialization of pre-approval plan in place in France, already having shipped $3.2 million worth of Iclusig to -- for patient use. And this is prior to the approval and much of that even prior to the CHMP recommendation for approval. An exceptional management team in place, led by a senior executive with 20 years of oncology business experience at major pharmaceutical companies, including in the BCR-ABL space.

So the rollout in Europe will be country-by-country. There is no single data as there is in the U.S. Once we have the European Commission approval, which we anticipate having very soon. The marked in this slide by the EMA approval, pricing and reimbursement becomes the focus of the European team. We can go first and fastest in Germany, the U.K. and continue in France. Other countries, such as Italy, Spain and Switzerland, will follow thereafter.

We have leading our pricing and reimbursement effort in Europe an experienced executive who has held the same position, having successfully of paying pricing and reimbursement for one of the largest, most successful oncology medicines in the world. So we bring real experience to the commercialization at all levels and all aspects of the effort, real experience to Iclusig in Europe.

We expect additional rollout in 2014 in other European countries, in Canada, Australia and Japan. This represents part of the next wave, if you will, of our focus on global commercialization of Iclusig, regulatory filings that we are submitting, pricing and reimbursement negotiations in those countries, so that we can put together a global network of commercial team members to effectively achieve the commercial potential of Iclusig.

So we got to start with some sort of a framework, and a reasonable framework, I think, is to look at the launches of dasatinib and nilotinib. Dasatinib launched in the U.S. in 2006. It was launched as the first second-generation medicine. This is the blue curve shown. And then nilotinib launched about a year later, so launched into a market with one competitor. And as you can see, early sales of these 2 medicines, which, today, are both billion-dollar medicines each, and they share that second-generation commercial space, so there's about $2 billion a year now for the second-generation medicines in the first 12 months of U.S. sales between $24 million and $38 million of sales.

And as we look at Iclusig, we track both numbers of prescriptions, as well as dollar value of sales of these competitive agents. And we think about the likely trends for commercialization of Iclusig that will take Iclusig, over the next 5 years, to $1 billion in sales. With a launch at the end of December and a focus entirely on CML and Philadelphia-positive ALL, it is clear to us that over the next 5 years, Iclusig will grow in market acceptance and uptake and adoption of Iclusig, first, in the resistant/intolerant population and then based upon the results of the EPIC trial, of course, to be analyzed. This will grow into a very strong BCR-ABL inhibitor for patients across all lines of therapy.

Now Iclusig prescriptions, interestingly, when you compare them to nilotinib prescriptions, nilotinib being the field leader today through the first 4 months of launch, so take the first 4 months of nilotinib back several years ago and the first 4 months of Iclusig, prescriptions for Iclusig are running 40% ahead of those for nilotinib. And that tells us that the adoption of Iclusig is broad and strong across the entire spectrum of the resistant/intolerant population of Philadelphia-positive leukemias in the U.S.

Now future development for Iclusig will carry it forward from the EPIC trial and patients with newly-diagnosed CML, and in Japan, first, to resistant/intolerant patients and then to the newly diagnosed patients. And then it will carry it beyond the -- these initial important expanded indications, but a much broader spectrum of studies in Philadelphia-positive leukemias, ranging from trials in the second line, trials with early switch such as the SPIRIT trial, combinations with chemotherapy, some of those data being presented at ASCO this year in patients with advanced-phase disease and patients with Philadelphia-positive ALL.

So we look at the expansion of Iclusig as a series of layers above the core indication of resistant/intolerant CML and Philadelphia-positive ALL. And then it will carry to other indications, to other diseases that have a high likelihood of being effectively and safely treated with Iclusig. GIST, gastrointestinal stromal tumors, is a -- one of the important targets of Gleevec. Gleevec has roughly $1 billion a year in global sales for GIST. We believe Iclusig has a very high likelihood of successfully treating patients with GIST, especially those who are resistant/intolerant to Gleevec, as well as other second-generation medicines and then as well based on its profile of other cancers such as lung cancer and acute myeloid leukemia driven by FLT3. So a biologically, genetically based design of subsequent clinical trials driving broader clinical indications. None of this in our projected commercialization numbers for Iclusig.

So let's spend the last couple of minutes talking about 113. 113 -- 26113, another one of our internally discovered cancer medicines, is a triple threat. It's a single medicine with 3 well-defined lung cancer targets: ALK, EGFRm and ROS1. We've already proven without question, it's a compelling new medicine for patients with ALK-positive lung cancer. We see promising opportunities that, based on future data, will become clear a potential lung cancer medicine as well for these other categories of genetically defined forms of lung cancer.

Here, again, the numbers of patients are large. The opportunity is great for each one: ALK, ROS1 and EGFRm. Knowing the biology and knowing the failures of patients who have EGFR forms of lung cancer patients who are being treated with drugs such as Tarceva, about half of those patients -- of the patients who fail drugs like Tarceva fail because of a single well-defined mutation, the T790M mutation, and 113 is a highly potent and strong inhibitor of T790M EGFRm. It spares the other forms of EGFR, so we anticipate that as one looks going forward, that its safety profile will distinguish it from all of the other forms of EGFR inhibitors. And as well, it is targeted, specifically, for the T790M mutation.

Let's look at where we are and what to expect in the next couple of weeks. We have announced that we'll transition the Phase I/II trials of 113 to Phase II by ASCO. ASCO's 2 to 3 weeks from now, so this is imminent.

The pivotal trial in ALK-positive non-small cell lung cancer will begin in the third quarter. We are on track to achieve that. We have shared all of the safety and efficacy data obtained to date on 113 with the regulatory agencies in the U.S., major countries in Europe, as well as more broadly, and have a clear unified plan that will lead us to evaluation of 113 and ALK-positive lung cancer and a registration strategy that will allow us to achieve registration of 113 quickly and with a very straightforward approach.

We have escalated the dose in our Phase I trial to 300 milligrams per day and have studied multiple doses at and below 300 milligrams. And we will provide a lot of additional insights into the Phase I trial, the safety and efficacy of 113 at the upcoming American Society of Clinical Oncology Meeting where the focus will be on the Phase I data, on dose escalation, dose and schedule, safety, tolerability and pharmacokinetics. We'll also lay out our strategy and plan for Phase II and the focus in the Phase II program on the T790M mutated form of EGFR for the third of the 5 cohorts in the Phase II trial.

So a clear focus, both in terms of registration and expanding our knowledge of 113 in the expanded Phase II program.

We see 113 moving rapidly now through clinical development through the Phase II cohorts, which are -- have been targeted to begin this quarter, and we are on track to achieve that. We expect, as I indicated earlier, to start the pivotal Phase III trial in parallel with continuing the Phase II program. So we are on track, as planned, last year to move 113 forward quickly and on a clear path to registration.

113, as I started, represents really 3 threats in 1: ALK, ROS1 and EGFRm. We already have compelling clinical data on ALK. We have definitive preclinical data on ROS1, and we'll study ROS1 patients in Phase II and EGFRm, a clear focus on the T790M patients in the Phase II program. So clarity with respect to what we're going to study, where we have the data and our plans going forward for registration of 113.

So as we look at 2013, it's a big year, a lot of activity and a huge amount of activities that we anticipate and drivers of value through the year; continuing the strong launch of Iclusig in the U.S; approval, pricing and reimbursement and promotion of Iclusig in Europe between now and the end of the second quarter for approval and launch in the third quarter; expanding Iclusig opportunity and other forms of Philadelphia-positive leukemias above and beyond the initial registration indication of resistant/intolerant disease, broadly expanding Iclusig in other cancers such as in gastrointestinal stromal tumors and AML; initiation of the pivotal trial for 113; expansion to the multiple Phase II cohorts for 113 to really expand out our comprehensive knowledge of 113 as an important new targeted cancer medicine in lung cancer; and lastly, presenting -- we anticipate the initial Phase II data on 113 in the fall, particular focus on the EGFRm T790M patients at the European Society of Medical Oncology.

So an exciting number of months coming up with multiple drivers of value. So what we've created at ARIAD over the last several years is one of the only sustainable, fully integrated global cancer companies that's able to discover, develop and deliver new cancer medicines to patients in need of better therapies. Thank you. I think there's a breakout session across the way.

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